2. S tandard costs are the estimated total costs per unit of output that are est

Question

2. S tandard costs are the estimated total costs per unit of output that are established: A. During actual production or service delivery B. After actual production or service delivery C. In advance of actual production and service delivery D. None of the above 4. A company may choose to produce an item in-house rather than purchase it from a supplier at a price lower than production costs if A. Direct and/or indirect costs are incurred anyway B. The incremental cost of producing the item in the short run is less than the supplier's price C. In-house manufacture of an item causes other production opportunities to be foregone D. All the above E. A and B above F. A and C above G. B and C above

Explanation / Answer

2) ans is C

Standard costs is the practice of substituting an expected cost for an actual cost in the accounting records, and then periodically recording variances showing the difference between the expected and actual costs.However it is also the cost which is estimated from historical data. Thus its prior to the production and thus ans is C

4)Ans is E

When firms incur direct and indirect cost and when incremental cost of producing the item in the short run is less than the suppliers price. Thus it is better for a company to produce in house

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